Should stock investors 'cut losses' at this time?

Many large-cap stocks fell sharply in the afternoon session of April 8. Photo: PHUONG DONG

At the end of April 8, the Vietnamese stock market witnessed the third sharpest decline in history when the VN-Index lost nearly 78 points, down to 1,130 points, equivalent to 6.43%. Thus, after the last 3 trading sessions, this index has decreased by 185 points.

According to experts, the continuous sharp decline in stocks is due to pressure from the US's reciprocal tax policy, of which Vietnam is subject to a rate of 46%. Along with that, the fact that many investors have started to have their stocks liquidated also causes the market to go down.

Linh (25 years old), an office worker in Hanoi, has been trading stocks for over a year. This is the first time she has experienced her account "almost wiped out" after just a few sessions. "I am confused and don't know what to do, cut losses or hold on," Linh shared.

Linh's case is not the only one in the market right now, when investors are wondering whether to cut losses or continue holding when stocks are deeply corrected.

"Investors should not cut losses at this time," Mr. Nguyen The Minh, Director of Research and Development for Individual Clients at Yuanta Vietnam Securities recommended.

This expert believes that the market may continue to decline on April 9, but this is very close to the time when Mr. Trump's reciprocal tariffs with major trade partners, including Vietnam, take effect. Therefore, investors need to observe further and make buying and selling decisions after the final decision.

"When the market falls, all industry groups go down. Whether the stock is good or not, the excess selling price at the floor is the same, making it difficult to cut losses," Mr. Minh commented.

Experts from Yuanta Securities Vietnam share lessons learned from the market's deep decline in 2020. At that time, the VN-Index fell from 1,000 points to more than 600 points in the first 3 months of the year due to investors' sell-off due to concerns about economic recession caused by the pandemic. However, the market recovered from the beginning of April, surpassing 850 points after 2 months thanks to people's "getting used to living with the pandemic" mentality.

With this development, Mr. Minh expects the market to soon bottom out in the next few sessions. "Investors are not under pressure to sell off mortgages. If they are losing, they should still temporarily hold stocks and not sell off," he said, adding that investors should restructure their portfolios or buy more stocks to reduce losses during the market's rebound.

A stock liquidation sale is when a securities company sells off an investor's shares to reduce the debt ratio to a safe level according to regulations. This often happens when the investor uses margin trading and the stock price falls below the securities company's permitted threshold but the investor has not yet paid more money.

Sharing the same opinion, Mr. Nguyen Trong Dinh Tam, Deputy Director of Investment Strategy, Analysis Center of Thien Viet Securities (TVS) said "should not sell now".

This expert said the optimal selling point is in the first session of decline, and at this time, investors should wait for information on the negotiation process as well as the official reciprocal tax rate of the US with Vietnam before making a decision. According to Mr. Tam, in case of positive information, investors should hold their stock portfolio to optimize according to the recovery.

However, these experts note that the possibility of the US tax on Vietnam being large and shocking will cause the market to continue to fall. If this scenario happens, investors will be forced to sell out when there is a clearer reason for their decision.

"If the information is cautious, investors should sell decisively. The purchase of shares after selling will be done when the market is balanced with low volume," said Mr. Nguyen Trong Dinh Tam.

Experts from TVS also recommend that investors should not use margin if the disbursement is only exploratory in nature with a low proportion, and at the same time prioritize stocks of enterprises with highly domestic business activities.

Commenting on short-term market fluctuations , Mr. Tam said that what investors should pay attention to is the results of Vietnam's negotiation policy with the US as well as the official reciprocal tax rate applied from April 9.

"Currently, the Vietnamese stock market reflects the scenario of exports facing a 46% tax rate from the US. Therefore, any information that leads to a delay or postponement of the application of reciprocal tax or a reduction in tax rates will lead to a short-term recovery of the market," said Mr. Tam.

Mr. Nguyen The Minh hopes that Mr. Donald Trump will delay imposing reciprocal tariffs on countries, thereby causing the Vietnamese stock market to bottom out and possibly increase again.

In addition to Mr. Donald Trump's new tariff policies, Ms. Do Minh Trang, Director of the Analysis Center, ACBS Securities Company, commented that the move of the US Federal Reserve (Fed) is also worth paying attention to.

"If the risk of recession and deflation makes the Fed confident in cutting interest rates sooner and more often, that will be a soothing medicine for the market," Ms. Trang said.

This expert emphasized that "it is very difficult to predict whether the stock market will soon recover or continue to adjust", because the macro economy has many unpredictable variables.

In the less optimistic scenario where President Trump does not extend the tax deadline, the VN-Index may continue to correct, but not too deeply. The index representing the Ho Chi Minh City Stock Exchange is expected to soon regain its equilibrium at an attractive valuation zone. Important support levels in the coming time include 1,160; 1,130 and 1,080 points.

VN (according to VnExpress)

Source: https://baohaiduong.vn/nha-dau-tu-chung-khoan-co-nen-cat-lo-thoi-diem-nay-408998.html